Public Capital, Private Capital and Economic Growth

Name: Public Capital, Private Capital and Economic Growth
Brand: Vita e Pensiero
Price: 6.00 EUR
Availability: OnlineOnly

digital

Article

Magazine

RIVISTA INTERNAZIONALE DI SCIENZE SOCIALI

Issue

RIVISTA INTERNAZIONALE DI SCIENZE SOCIALI - 2012 - 2

Title

Public Capital, Private Capital and Economic Growth

Author

Alberto Bucci

Publisher

Vita e Pensiero

Format

Article |

Pdf

Pages

Online from

02-2012

Issn

0035-676X (print) | 1827-7918 (digital)

€ 6.00

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Description

A growth model is presented in which productive government expenditure takes the form of a stock. Private and public capital interact with each other in two ways. The first is related to the specification of the aggregate production function (Cobb-Douglas vs. CES). The second has to do with the rates of investment in the two types of capital, and arises from the law of motion of public capital. The share of public capital devoted to output production can be exogenous or endogenous. In this framework, we analyse how the optimal growth rate of the economy depends on the degree of complementarity/substitutability between the investments in the two kinds of capital, as well as on the elasticity of substitution between the two capital-inputs in the production of goods. Unlike Barro (1990), the relationship between optimal growth and the share of productive government expenditure in GDP is nonlinear and characterized by threshold-effects.

Keywords: Economic Growth; Complementarity/Substitutability; Public Capital; Private Capital.
JEL Classification: O41; E60; H54.